Here’s a question I get asked a lot.
What is financial advice actually worth?
It sounds like an easy question to some people:
You say to yourself:
“If my adviser charges me $5,000, they should make me an extra $5,000 from my investments.”
But if your portfolio returned 8% and the market returned 10%, the adviser failed.
That seems logical. Right?
I think that’s almost completely the wrong way to think about (yet I see it every day!).
The truth behind financial advice benefits
Over the past couple of years, our team at Rask Advice have spoken with hundreds of Australians, prepared more than 150 Statements of Advice for singles, couples or families, and worked with people with $500,000 in net wealth to more than $50 million.
I’ve become increasingly convinced that the investment portfolio is only one part of the value. And very strong data from Vanguard, Russell and so many other research firms is showing us why…
Investments are only part of the financial plan
I went back into some of our most complicated financial plans and found that the actual investment recommendations might only have been 10-15% of the financial plan.
For example, one financial plan (“Statement of Advice”) is 42 pages, and the true investment sections were approximately 6 pages.
And keep in mind, these are complex clients (with trusts, tax entities, large existing portfolios, family investments, etc.).
Furthermore, a financial plan is the start of a journey with a good financial planner. Data from various sources suggest a client will often stay with a financial adviser for 10-20 years, if they make it through the first 2-4 years.
Data from Russell Investments’ 2026 “Value of an Adviser” report found that, “90% [of clients] rate their adviser as good or excellent value, up from 84% in 2025, despite average annual fees rising from $4,572 to $5,235.”
But as usual, the context matters. And it’s really important you understand where this value comes from…
Again, oftentimes investing for/with a client is not the most important part.
What research says about the value of advice
The fascinating thing is that many very large investment firms have spent decades trying to quantify the cost-benefit of paying for financial advice.
Vanguard has been researching what it calls “Advisor’s Alpha” for more than 20 years.
Vanguard research estimates that following a series of financial advice best practices can add up to, or even exceed, 3% in net returns for some clients.
Depending on the size of your Super, investments or overall wealth, that’s substantial.
Russell Investments has now published its Value of an Advisor study for more than 13 years.
Russell’s latest 2026 research, published in August 2026, analysed data from 501 investors with financial advisers, 200 non-advised investors and 237 different financial advisers and found the potential value of advice at least 5.5% per year.
That number is made up of things like asset allocation (part of investing), behavioural coaching (not just investing, but other stuff), customised family wealth planning and tax-smart planning.
(If you ask me, the “tax-smart planning” is even more important in Australia than ever before!)
Again, there’s a really important distinction here.
Neither Vanguard’s nor Russell’s numbers mean:
“Hire an adviser and they’ll beat the market by 3% or 5.5% every year.”
That’s not the point.
In fact, Vanguard explicitly warns against thinking about its number as an annual performance bonus.
Why?
The value of mistakes you avoid
Because financial advice doesn’t deliver its value neatly on 30 June every year.
Some value accumulates slowly.
Some arrives all at once.
And some of the biggest value comes from something that never happened.
The investment you didn’t panic-sell when oil prices spiked following Iran and the USA.
The speculative investment you didn’t put $200,000 into near the top (e.g. bitcoin, or an investment property you would have bought inside an SMSF).
The tax consequence you discovered before triggering it. Like all of these darn Super changes!
The insurance problem you fixed before something went wrong. Whether you’re 25 or 55.
The retirement strategy that stopped you being unnecessarily scared to spend your own money. “Liberation Day” 2025 – remember that?
The inheritance you didn’t immediately throw into whatever ETF or social media strategy had performed best over the previous 12 months.
In short, there’s no sentence on your portfolio report that reads:
“Terrible decision avoided: +$174,000.”
But economically, the value is very real.
Thanks to decades of data, studies involving hundreds of advisers and thousands of investors, we can actually measure some of the impact.
Rather than asking what an investment fund returned, the DALBAR study looks at what individual investors actually earned after accounting for when they bought and sold.
The difference can be enormous.
In 2024, for example, the USA’s S&P 500 returned 25.02%.
DALBAR calculated that the average investor earned just 16.54%.
That’s an 8.48 percentage point gap!
Markets didn’t cause that entire gap.
Neither did index funds, ETFs, Super, politicians, the misquoted “SPIVA report”, or taxes.
In one year, individual investor behaviour resulted in an enormous loss of value. On a $500,000 ETF portfolio or a Superannuation account, that’s the kind of money you notice.
(And worse still, in our experience, are the relationship issues that result from this type of thing in couples, especially those where one partner carries the load of financial decision-making responsibility).
Interestingly, and thankfully, the gap of underperformance narrowed dramatically in 2025 to just 0.72 percentage points.
But I think that actually strengthens the lesson here.
The value of avoiding behavioural mistakes isn’t a predictable 1%, 2% or 3% every year. It is episodic.
Sometimes the stock markets are boring and doing nothing is easy.
Then 2008 happens.
Or COVID happens.
Or the middle east happens.
Or the Government drastically changes tax and superannuation policy.
Or the stock market goes flat for 4 years.
Or the bond market rumbles underneath the entire financial system.
Or markets boom and everyone around you suddenly seems to be getting rich!
Those are the moments when one decision can overwhelm years of small differences in fees.
Why small differences compound over time
This becomes even more important when you introduce time…
In its landmark review of Australia’s superannuation system, the Productivity Commission modelled what persistent differences in investment performance can do over an entire working life.
Its example started with a 21-year-old earning $50,000.
Someone experiencing the returns of a median bottom-quartile Super fund over their working life was projected to retire with around $660,000 less than someone experiencing median top-quartile fund returns.
The Productivity Commission described it another way:
13 years of starting salary. Gone.
Not because the person forgot to make one brilliant stock pick. Or because they were financially illiterate.
Because relatively small differences persisted and compounded for decades. Maybe no-one told them. Or challenged them. Or pointed it out. Maybe they were too stubborn. Or acting on the wrong information.
That’s what makes decisions early in life so important.
Compounding simply means that returns in one year can themselves earn returns in future years.
For example, $100,000 compounding at 7% for 30 years grows to roughly $761,000.
At 6%, it grows to around $574,000.
One percentage point sounds tiny. Maybe not even worth acting on.
But over 30 years, in this example, it becomes a difference of roughly $187,000.
And this is why I think there’s another misconception worth challenging:
When financial advice can make the biggest difference
Financial advice isn’t just for wealthy 65-year-olds preparing for retirement. If anything, it should be the opposite.
Sometimes the most valuable time to get advice is much earlier.
You’re getting married.
You’re having your first child.
You’ve received an inheritance.
You’re buying a house.
Your business is starting to make serious money.
Your business is starting to make serious losses.
You’re going through a divorce.
You’ve lost someone close to you.
You’ve received an insurance payout.
You’re approaching retirement.
Your Nigerian uncle was actually a prince*.
These are some of the financial inflection points.
And if a decision made at 30 continues affecting your finances at 40, 50, 60 and 70, getting that decision right has a very long runway to compound.
Of course, this doesn’t mean every financial adviser is worth their fee. They’re not.
And “my adviser will make me 3% extra” is absolutely not what I’m saying.
Good advice must be much broader than investment selection. So if your adviser is only talking about investments, walk away. Quickly.
A good holistic adviser should understand your tax position, super, investments, insurance, debt, cash flow, retirement expectations, lifestyle today, family circumstances, estate planning considerations, goals and, critically, how all of those things interact.
They should also be willing to tell you when doing nothing is the best decision.
They should be willing to tell you “STOP WHAT YOU ARE DOING. YOU ARE WRONG.”
(And you don’t have a tantrum and leave them.)
And this is where I think financial advice has changed enormously.
Information has become cheap.
You can Google contribution limits.
You can ask AI to explain an ETF.
You can build a portfolio online in minutes.
Russell makes the point particularly well in its latest research: the differentiator for advice is increasingly not access to information, but the ability to apply that information with judgement, context and discipline.
I think that’s exactly it.
A financial adviser shouldn’t just give you more information. A financial plan should not be 50+ pages.
They should help you make better decisions.
So perhaps the question isn’t:
“Can my adviser beat the market by more than their fee this year?”
A better question might be: “How many better financial decisions could I make over the next 30 years with someone good in my corner?”
Because one of those decisions might save 0.50% per year from a mistake you never made.
Another might save you $20,000 in unnecessary tax.
Another might prevent a six-figure mistake during a market crash.
Another might give you the confidence to retire two years earlier.
And another might simply let you sleep better at night knowing there’s a plan.
Another might make you confident to buy shares when everyone is fearful.
Some of those things can be measured.
Some can’t.
But they all count.
Just. Think about it.
A free platform for better decisions
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And if you’re approaching one of those major financial turning points and you’ve been thinking about getting professional advice, now is a good time to have the conversation.
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